Foreign Exchange

A handy guide to currency transactions when you’re abroad

The sneaky fees that come with exchanging U.S. dollars for foreign currency can take the glow off a perfect international holiday. But a bit of homework, knowing your options, and sticking to a plan can help make your money go further.

Ways to Pay

Charge it. Use a credit card where possible. Credit and debit cards give you access to the daily bank exchange rate, which is usually the most favorable to consumers. Check your card agreement before your leave. Merchants may ask if you want to pay in U.S. dollars. While that might sound tempting, you could get a less favorable exchange rate and be hit with a fee. When invited to pay in your home currency, say no.

Withdraw wisely. Avoid currency exchange kiosks in airports and shopping areas, as they charge high fees. And that cute, gray-haired lady with a handmade sign: "Exchange money here. Best rates!" In the town square? Just smile and keep walking.

An ATM is your best bet. Ask your bank if it is part of an international network or if it belongs to the Global ATM Alliance. Members typically waive their ATM fees for customers of alliance banks. If not, accumulate fewer fees by minimizing ATM visits. Better to pay one withdrawal fee on $300, than six fees for taking out $50 at a time. Be sure you know your four-digit PIN; you’ll need it to use an ATM. If you don’t remember it, contact your card issuer to have it reset.

Before You Go

Purchase some currency before you leave home. In exotic locations, credit card usage is less common. Do your research so you aren’t caught short. Even in popular destinations, you might need cash upon arrival for taxis, tips, or that impulse buy at the airport. Your local banks are a good option, especially if they agree to exchange any leftover currency at the same exchange rate when you return. You’ll typically receive a reasonable exchange rate on currencies such as euros or British pounds. Still, compare the rate you are getting with an online source such as xe.com for the live exchange rates. If the difference between the live rate and the quoted rate is significant, consider a foreign-currency specialist. These include brick-and-mortar outlets such as Travelex or online providers such as foreignexchange.com.

Avoid foreign transaction fees. Many credit cards charge a fee of 1 to 3 percent on every purchase made outside the United States. Check your card’s policy before leaving home. If it charges a transaction fee, consider getting one that does not to use on your trip.

Get the right chip. The good news: Our credit cards now come with an embedded security chip. The not-so-good news: In the U.S., most are chip-and-signature, while chip-and-PIN remains the international standard. The solution: Credit card companies recommend you carry a true chip-and-PIN card (such as your debit card) to use at unmanned stations such as a train-ticketing kiosk.